FINANCIAL LITERACY TRAINING ON REPAYMENT OF BUSINESS DEVELOPMENT FUNDS LOANS IN RWANDA
Abstract
This study sought to determine the influence of financial literacy training on repayment of business development funds loans in Rwanda. The research covered the business people with loans at BDF within Nyarugenge District. The study adopted a cross-sectional survey research design and in-depth interviews which allowed the collection of primary quantitative data through structured questionnaires. Target populations of 300 finance managers/ accountants of SMEs comprising 164 trading 26 manufacturing, 10 hairstyling, 62 dressmaking, and 38 carpentry enterprises. Stratified random sampling technique was used to obtain a sample of 172 SMEs. Both primary and secondary data was used for the study. Primary data was collected using a well-structured questionnaire. The study utilized questionnaires as an instrument for data collection. Data was analyzed for descriptive and inferential statistics using SPSS version 21. Descriptive statistics such as tables, graphs, charts and percentages analysis were used for presentation of data. Also, a linear regression model was used to analyze quantitative data and was developed and tested to explain the relationship between various proxies of determinants of loan repayment in Rwanda. There was Strong positive and significant effects of financial literacy training on loan repayment (β = .444; t = 1.815; p < 0.05). The study concluded that BDF loan was faced with a number of challenges in its attempt to empower the SMEs in Rwanda, specifically in Nyarugenge District. Some of the challenges included inadequate training to the SMEs in Nyarugenge District in Rwanda. BDF employees were trained effectively and therefore had relevant skills as far as microcredit was concerned. Clear legal recovery procedure and legislation that punished defaulters was lacking. These structures needed to be put in place by the fund management if successful loan recovery was to be achieved. Majority of the youths felt that the amount of loan given was very little leading to poor capital formation. In addition, most groups experienced problems in borrowing money including long duration taken between application and receiving of funds, small amount of loans awarded, group formation problems, a lot of documentation required, lack of training on loan usage, processing speed of the loan was too low as well as long access procedures.
Keywords: Financial Training Literacy, Repayment, Business Development Funds Loans, Rwanda
CITATION: Niyongabire, B., & Mulyungi, P. (2020). Financial literacy training on repayment of business development funds loans in Rwanda. The Strategic Journal of Business & Change Management, 7 (4), 1451 – 1461.
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DOI: http://dx.doi.org/10.61426/sjbcm.v7i4.1873
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